Ann: Variation of Takeover Bid, page-12

Article in Data Room this evening:

Infigen battle not over yet, says Ord Minnet

The takeover tussle for Infigen Energy could be far from over, say analysts in an Ord Minnett research report, adding that new players could enter the contest.

They say that large exploration companies could be interested in Infigen, noting Shell and Total are looking to enter the Australian retailing market.

The assessment comes after UAC Energy this week lifted its bid for the renewable energy provider to 86c per share from 80c per share, matching the price of an offer already on the table by Iberdrola, although UAC had dropped all of its conditions.

But Iberdrola soon responded with an improvement to its price – lifting its 86c per share bid to 89c.

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“Ord Minnett’s view remains that the offer prices look full, representing close to replacement cost, although there is the possibility of further price action with both parties showing clear and ongoing interest,” the analysts said in a research note.

Ord Minnett said other parties may be interested in participating, with the assets likely to be of interest to infrastructure providers or those looking at entering the Australian electricity retailing market

READ MORE:Wind power more than hot air in this market|Iberdrola lifts offer in hot battle for Infigen|Battle for Infigen heats up as rival’s offer forces UAC Energy’s hand|Infigen’s future up in the air as Iberdrola closes in on target

The analysts have raised their target price to 89c from 86c in line with the latest Iberdrola offer.

UAC currently holds 13.4 per cent of Infigen’s stock, but Iberdrola’s offer has backing from the major shareholder TCIF, which holds more than 30 per cent of the stock.

Iberdrola’s bid has been recommended by the Infigen board, but it comes with conditions, including a 50 per cent minimum acceptance.

The analysts estimate that Iberdrola’s revised offer implies a value for the wind farm assets of $1,932 per kilowatt and $115m in value for Infigen’s gas plants).

“This is still slightly below replacement cost of $2,000–2,500/kW and so there could yet be more to play out,” say the analysts.